Estate Management on new-build estates

Chief_of_Staffy

user1977 said:

Richard436 said:

  One of the concerns with the development I am considering is that the estate management is authorised to take out bank loans for whatever it needs, with capital and interest paid via increased fees.

Why is that a concern? Presumably the alternative would be them asking for everybody to make a large payment up front?

The alternative is to not levy a charge at all, because such fees have no justification and are nothing more than legalised extortion.

Regarding the clause, to commit to paying off loans taken out by a third party, with no say as to their terms or interest rates, how much they amount to, who they're taken out with or what they're to be spent on, is what I'd conservatively describe as a bad idea.

mlz1413

Chief_of_Staffy said:

user1977 said:

Richard436 said:

  One of the concerns with the development I am considering is that the estate management is authorised to take out bank loans for whatever it needs, with capital and interest paid via increased fees.

Why is that a concern? Presumably the alternative would be them asking for everybody to make a large payment up front?

The alternative is to not levy a charge at all, because such fees have no justification and are nothing more than legalised extortion.

Regarding the clause, to commit to paying off loans taken out by a third party, with no say as to their terms or interest rates, how much they amount to, who they're taken out with or what they're to be spent on, is what I'd conservatively describe as a bad idea.

How can you know what thr interest rate will be in 10 or 35 or 60 years?

Flats built in the 60s are now having to spend money on the infrastructure and some of the management companies are taking out loans.

These are whole estates with flats and houses, some social house and some privately owned so rules have to be made for the forever upkeep.

As I said before its a massive investment and if you aren't happy there is no point because you would also be worried.

I am happy with my contract and house, not in that order !! And lots of houses sell quickly so I'm ok with my purchase

ThorOdinson

You might get lucky and they are okay, they might be a nightmare. Avoid if possible.

Chief_of_Staffy

mlz1413 said:

Chief_of_Staffy said:

user1977 said:

Richard436 said:

  One of the concerns with the development I am considering is that the estate management is authorised to take out bank loans for whatever it needs, with capital and interest paid via increased fees.

Why is that a concern? Presumably the alternative would be them asking for everybody to make a large payment up front?

The alternative is to not levy a charge at all, because such fees have no justification and are nothing more than legalised extortion.

Regarding the clause, to commit to paying off loans taken out by a third party, with no say as to their terms or interest rates, how much they amount to, who they're taken out with or what they're to be spent on, is what I'd conservatively describe as a bad idea.

How can you know what thr interest rate will be in 10 or 35 or 60 years?

Yes, kind of my point. You're legally committing yourself to pay whatever is asked, at any time, with no right of challenge let alone refusal.

mlz1413 said:

Chief_of_Staffy said:

user1977 said:

Richard436 said:

  One of the concerns with the development I am considering is that the estate management is authorised to take out bank loans for whatever it needs, with capital and interest paid via increased fees.

Why is that a concern? Presumably the alternative would be them asking for everybody to make a large payment up front?

The alternative is to not levy a charge at all, because such fees have no justification and are nothing more than legalised extortion.

Regarding the clause, to commit to paying off loans taken out by a third party, with no say as to their terms or interest rates, how much they amount to, who they're taken out with or what they're to be spent on, is what I'd conservatively describe as a bad idea.

These are whole estates with flats and houses, some social house and some privately owned so rules have to be made for the forever upkeep.

In most new build freehold developments there is no need for any fee because there is no requirement for communal areas. That is to say, the developers will often include a patch of bush or a square of grass purely so they can claim it is 'communal' and rake in £20k a year for its upkeep.

And if the roads require upkeep it's not because they were adoptable and the council refused to adopt them, it's because either the developers did not submit them for adoption or they were deliberately made non-compliant in some minor way so that adoption wasn't an option, and the developer could extort the residents on the strength of it.

It's a complete scam. Estate charges are a result of rent charges being outlawed on new builds and developers finding a workaround.

GixerKate

Richard436 said:

Because of the way the arrangements are set up, residents don’t have the option of forming their own management company or taking on any legal control. I’ve seen the accounts for 2023–24, and a sizeable proportion—about 40%—relates to inspections, insurance, management fees, and similar overheads. I requested the 2024–25 accounts and any forward planning information, but haven’t received a reply. That lack of responsiveness seems to match comments I’ve seen from homeowners on other developments managed by the same company.

This is the bit I'd be worried about and would possibly walk away.

For context I bought a new build 5 years ago with an estate service charge that covers the green areas and playground but not the drains or roads (well not the main ones) as these would be adopted by the council.  It took over 4 and a half years but now the adoption has taken place so all good.  Until the adoption the developer (NOT the management company with the service charge) was responsible for the upkeep of the roads and drains.

Written into our paperwork is the option of taking over the management company and that is what we are now in the process of doing.  The management company is pretty awful - charge quite a bit and doing the absolute minimum.  They tried to tell us there was a £20k hole in the budget and would have to increase the charge substantially as a result but couldn't tell us where the hole came from.  We looked into it and as it happens the hole was due to the fact they had forgotten to invoice the housing association for the 40% of the estate that they were responsible for (for 3 years I might add!), the management company was trying to put the whole service charge against the freeholders even though we were only 60% of the estate.  

I wouldn't rule out a house that comes with a service charge but I would (and did) look very hard at the small print.  When house hunting I walked away from the ones where it wasn't possible to have the option to put the management company in the hands of the residents as otherwise there is no cap on how much they can choose to charge.  My requirements were for the roads and drains to be adopted (thus keeping the possible costs lower) and option for residents to manage the estate.

Aimez

I have lived in an estate for 10 years that has fees. I am only a 2  bed so feel are small the estate waa about 80% complete when I moved in. There are some smart people who live here. So a residents association is created and we all pay £2 a year for this (management company take fees not related)  We have a committee AGM once a year and so far they have got rid of thr groundsleepers as they were originally picked by the house builders and too expensive! You have to have this set up to control what they do which does rely on people giving up their time. On nice side we have a Facebook group which us lovely as buy, sell give away, we have a play area and green they hold barbecues etc on and since we all have similar houses any issues with appliances thr buildings, paint is so helpful!

MyRealNameToo

Richard436 said
How does this affect people mentally?  Are people happy or worried about this?

If anyone has recent, first-hand experience—positive or negative—I’d really appreciate hearing your thoughts. It would help me make a more informed decision.

Different people will react differently to it, like a lot of things in life. 

My mother had a property with estate fees that were relatively high but it also included a community building that had a few facilities. Whilst she did complain a little about the fee and it is unregulated she did however love the fact that there was a lot of green spaces in the development and these were all really well looked after, planted nicely which she really liked. When she left and moved into an older property without fees she was often complaining about the barren areas that neither council nor neighbours maintained that were normally ugly and often over grown and littered. 


Roads, cousin has had a house for as long as I've been alive and still the neighbours cannot come to an agreement how the cost of the private road maintenance should be split and so 40+ years on no work at all has been done to it. They've gotten close a few times and then someone has moved house and the new owner doesnt agree. 

I can't drive to their home, haven't been able to for over a decade, yes my car has lower than normal ground clearance etc but have seen several other more normal cars lose bits of the underside as they try and go along it. They've avoided the issues of maintenance fees but people have lost sales because of the condition of the road. 

SarahB16

Aimez said:

I have lived in an estate for 10 years that has fees. I am only a 2  bed so feel are small the estate waa about 80% complete when I moved in. There are some smart people who live here. So a residents association is created and we all pay £2 a year for this (management company take fees not related)  We have a committee AGM once a year and so far they have got rid of thr groundsleepers as they were originally picked by the house builders and too expensive! You have to have this set up to control what they do which does rely on people giving up their time. On nice side we have a Facebook group which us lovely as buy, sell give away, we have a play area and green they hold barbecues etc on and since we all have similar houses any issues with appliances thr buildings, paint is so helpful!

Really interesting to hear this @Aimez as it sounds like your residents association has quite a lot of control over the management company in terms of directing them to what work needs to be done?

Do you know how often your residents association meet with the management company or I presume the residents association could just email the management company to inform them of what they wish them to focus their time on?  

whizzywoo

We have recently bought a freehold property with an estate management company.

One key item I looked for was the ability for the residents to be appointed once the build is complete.

The other was to make sure that the management company cannot repossess your house if you don't pay up on time.  This will be stated in the covenants as a "rentcharge", which is a legal term and what a lot of people are calling fleecehold.  Look it up, there are lots of solicitors on the internet who have articles explaining it.

Richard436

Thanks, user1977 and mlz1413.
I may be overthinking this. I’m from a generation where estate management arrangements simply didn’t exist, so it’s all new to me. I also recognise that younger people today face far tougher challenges getting onto the housing ladder than I ever did — and that’s very unfair.

I have no issue contributing a fair annual fee to keep the area well maintained, although; in the past, Local Authorities had the funds to provide all the services. I just want to be sure the system is transparent and that homeowners aren’t left vulnerable to unreasonable costs, but more specifically to anyone taking advantage of the setup.